4ts02:20:21eBookYour firm has an average collection period of 38 days. Current practice is to factor allreceivables immediately at a discount of 1.9 percent. Assume that default is extremelyunlikely. What is the effective cost of borrowing? (Do not round intermediatecalculations and enter your answer as a pecent rounded to 2 decimal places, e.g.,32.16.)Effective cost of borrowing18.65 % 3602:20:34ippedBookHintPrinterencesConsider the following financial statement information for the Newk Corporation:ItemBeginning$ 10,500InventoryAccounts receivable5,5007,700Accounts payableCredit salesCost of goodssold$ 85,00065,000Operating cycleCash cycleCalculate the operating and cash cycles. (Use 365 days a year. Do not roundintermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)Ending$ 11,5005,8008,100daysdays

An Accounts payable turnover indicates the efficiency of the firm in managing its payables.A high…

Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.9 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.)

Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.9 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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National Savings Bank offers money market accounts with varying interest rates, depending on the balance in the account. For accounts under $10,000, the interest rate is 2.5%; accounts between $10,000 up to and including $25,000 have an interest rate of 3.25%; accounts over $25,000 earn an interest rate of 5%. Write a piecewise function R for the interest earned on an account with x dollars.
Acacia Bank expects the euro to depreciate against the dollar and plans to take a short position in euros and a long position in dollars. Assume the following1. Interest rate on borrowed euros is 5 percent annualized2. Interest rate on dollars loaned out is 6 percent annualized3. Spot rate is 0.90 per dollar4. Expected spot rate in ten days is 0.95 per dollar5. Acacia Bank can borrow 10 millionDescribe the steps Acacia should take to profit from shorting euros and going long on dollars, show your calculations.
The amount of simple interest on a deposit varies jointly with the principal and the time in days. If $17.85 is earned on a deposit of $3500 for 12 days, how much interest would be earned on a deposit of $3700 for 20 days? ... The deposit would earn S in interest. (Simplify your answer. Round to the nearest cent as needed.)
A financial institution uses a loan base rate of 4.35% and sets the credit risk premium at 6.68%. The institution charges a 1.5% loan origination fee and imposes 3.22 % compensating balances. The required reserves for this institution are 10%. Additionally suppose your institution specifies the following linear probability model to estimate the probability of default: PD = Bo - Bi Wealth-B2Credit Score + B3 Number of Bankruptcics Bo = 10, 109.5 %3D B1 = 0.10 %3D B2 = 0.20 %3D B3 = 0.60 %3D Use the information above to answer the question. What is the gross rate of return on the loan? O 9.31% O 11.03% O 12.53% O 12.90%
PanAir Reservations (PAR) borrowed $270,000 for 36 days from its bank. The interest rate on the loan is 9 percent. Assume there are 360 days in a year. Calculate the APR and rEAR assuming the loan is a simple interest loan with no compensating balance requirement. Do not round intermediate calculations. Round your answers to two decimal places. APR: % rEAR: % Calculate the APR and rEAR assuming the loan is a simple interest loan with a 20 percent compensating balance requirement, and PAR currently holds no funds at the lending bank. Do not round intermediate calculations. Round your answers to two decimal places. APR: % rEAR: % How much would PAR have to borrow if it needed $270,000 to pay bills and the loan required a 20 percent compensating balance? Round your answer to the neares dollar. $
A commercial bank is planning to offer Luna a loan in the amount of $15,000 and the bank figures that Luna will repay the loan in full with probability 0.79 and default otherwise. Also, Luna has asked for an interest rate of 12%. In order for the bank to be able to offer this rate, what is the collateral amount that Luna must offer the bank in the event of default? $8,177.5 $8,228.6 $8,366.9 $8,401.1
Check my Solve for maturity value, discount period, bank discount, and proceeds. Assume a bank discount rate of 7%. Use the ordinary interest method. (Use Days in.a year table) (Do not round Intermediate calculations. Round your final answers to the nearest cent.) Maturity value Date of Rate of Interest Length of note Date note discounted Proceede Face value (principal) 60,600 Discount perlod Bank discount note 90 days May 13 |days June 4
Which results in a lower total interest charge, borrowing $1 comma 5201,520 to be repaid 12 months later as a single-payment loan or borrowing $1 comma 5201,520 to be repaid as a 12-month installment loan? Assume a simple interest method of calculation at 11.5011.50 percent interest. Defend your answer. Note: Round intermediate computations to at least five (5) decimal places. Click on the table icon to view the Monthly Installment Loan Payment Factor (MILPF) table: 1. Question content area bottom Part 1 The amount of interest on the single-payment loan is $enter your response here. (Round to the nearest cent.) Part 2 The amount of interest on the 12-month installment loan is $enter your response here. (Round to the nearest cent.) Part 3 Why does the 12-month installment loan result in lower interest charges? (Select the best choice below.) A. Interest costs are higher when you have the use of the entire $1 comma 5201,520 for the full year…
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Two types of borrowers, type A and B, are requesting a loan in the amount of $44,000. Type A repays with prob. 1, while type B repays with prob. 0.76. If a bank cannot observe type, but believes that fraction 0.8 of the borrower pool is type A, then what is the competitive pooling rate the bank can offer these borrowers? 8.7% 7.7% 6.5% 5.0%
Suppose that a bank does the following: a. Sets a loan rate on a prospective loan with BR = 4.23% and ϕ = 3.16%. b. Charges a 0.33 percent loan origination fee to the borrower. c. Imposes a 9 percent compensating balance requirement to be held as noninterest-bearing demand deposits. d. Holds reserve requirements of 8 percent imposed by the Federal Reserve on the bank’s demand deposits. Calculate the bank’s ROA on this loan.

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